NOTHING about 1209 North Orange Street hints at the secrets inside. It’s a humdrum office building, a low-slung affair with a faded awning and a view of a parking garage. Hardly worth a second glance. If a first one.

But behind its doors is one of the most remarkable corporate collections in the world: 1209 North Orange, you see, is the legal address of no fewer than 285,000 separate businesses.

Its occupants, on paper, include giants like American Airlines, Apple, Bank of America, Berkshire Hathaway, Cargill, Coca-Cola, Ford, General Electric, Google, JPMorgan Chase, and Wal-Mart. These companies do business across the nation and around the world. Here at 1209 North Orange, they simply have a dropbox.

What attracts these marquee names to 1209 North Orange and to other Delaware addresses also attracts less-upstanding corporate citizens. For instance, 1209 North Orange was, until recently, a business address of Timothy S. Durham, known as “the Midwest Madoff.” On June 20, Mr. Durham was found guilty of bilking 5,000 mostly middle-class and elderly investors out of $207 million. It was also an address of Stanko Subotic, a Serbian businessman and convicted smuggler — just one of many Eastern Europeans drawn to the state.

“Shells are the No. 1 vehicle for laundering illicit money and criminal proceeds,” said Lanny A. Breuer, assistant attorney general for the criminal division of the Justice Department. “It’s an enormous criminal justice problem. It’s ridiculously easy for a criminal to set up a shell corporation and use the banking system, and we have to stop it.”

I once tried to trace the ownership of a student housing property. Nothing about it at City Hall. Nothing about it at the Alabama Secretary of State's office except an address or two. I finally ended up contacting a Delaware agency and was told that that such information was voluntary and the owner did not choose to divulge it.

“Companies choose our state and we are proud of it,” said Richard J. Geisenberger, Delaware’s chief deputy secretary of state and its leading ambassador to business. “We spend a lot of time in the United States and traveling internationally to let people know that Delaware is a great place to do business.”

Or at least rent a mail box.

“Companies are able to turn taxable income into tax-exempt income in Delaware and then use it to reduce their tax bills in other states,” said Bradley P. Lindsey, an accounting professor at North Carolina State University. Delaware does not tax certain profit-making intangible items — like trademarks, royalties, leases and copyrights. Yet those same intangibles can be part of a tax strategy that allows them to be classified as deductions in other states, reducing a company’s tax bill there.

Operations in other states pay huge license fees to the Delaware subsidiary, who owns them, for the right to use their own trademarked name, logo, etc. The Delaware entity pays no tax, and the operations in other states deduct enormous amounts of business costs.

“We have a system that is the greatest creator of wealth in the history of the world,” said Mr. Geisenberger, the Delaware official. “We will not support any changes that change the friendliness of American business and close our doors to capital formation and the ease of doing business.”

Crooks who own companies can save millions by just "making stuff up." And Delaware allows it.

WorldCom, the telecom giant that collapsed into bankruptcy after an accounting scandal, could be a symbol for the Delaware loophole. Bankruptcy court filings showed that the company had cut $20 billion from state taxes thanks to an intangible asset it called “management foresight.”

“See, in my line of work you got to keep repeating things over and over and over again for the truth to sink in, to kind of catapult the propaganda.”― George W. Bush

Delaware has the Court of Chancery which makes it so appealing to Corporations. It is a court of equity.

"The Delaware Court of Chancery is widely recognized as the nation's preeminent forum for the determination of disputes involving the internal affairs of the thousands upon thousands of Delaware corporations and other business entities through which a vast amount of the world's commercial affairs is conducted. Its unique competence in and exposure to issues of business law are unmatched."

"For Every Confidence There Is Someone Willing To Betray It" Author Unknown

Samarye wrote:An excellent example of why allowing individual states to generate their own laws is now an obsolete concept. This sort of thing should be standardized at the Federal level.

For Corporations or LLCs or LLPs or Sub-S or a small mom and pop restaurant or do you even mean for the little guy that just cuts grass on the side as a sole prop? Should he have to apply for Federal license? Can you imagine the costs and the red tape?

If corporate ... what size? My small photography business is an Alabama registered one man Sub-S corporation. Do you want to classify me along with Exxon and require the same of me?

IOW ... its not always black and white. People think "corporate' and they instantly think Wall Street and BP Oil. They forget us little small town corporate guys trying to make a living. I have enough to deal with ... city license and sales taxes, county license and sales taxes, state privilege tax and sales taxes. I don't need another layer of paperwork from the Federal level.. I need more time to work.

Last edited by bamapilot on Mon Jan 28, 2013 4:33 pm, edited 1 time in total.

What I mean is the rules for an Alabama Corp should be the same as any other state.A state is a good size for administration, not individual legislation. Why should a Delaware corp be any different than an Alabama corp?

Samarye wrote:What I mean is the rules for an Alabama Corp should be the same as any other state.A state is a good size for administration, not individual legislation. Why should a Delaware corp be any different than an Alabama corp?

Beyond the lax corporation laws in Delaware, there are state/local tax issues that prevent a national corporation rule from ever working correctly. The complexities with bringing in new companies to any location, including tax incentives and whatnot, would become even more difficult to wade through if all corporations were set up under a single federal format. As it stands now, each state can control (or not) the corporate make-up for businesses licensed in each state. Passing that up to the federal level takes away state control. Not to mention, our already over-spent government budget would increase that much further with a federal corporate oversight office to monitor the necessary reportings for each corporation (i.e., taxes, annual reports, etc.). SEC isn't set up for such monitoring, as they focus solely on those companies that are publicly traded and are a watchdog for Wall St. shenanigans.

Whether one believes in a religion or not,and whether one believes in rebirth or not, there isn't anyone who doesn't appreciate kindness and compassion. ~ Dalai Lama

Samarye wrote:What I mean is the rules for an Alabama Corp should be the same as any other state.A state is a good size for administration, not individual legislation. Why should a Delaware corp be any different than an Alabama corp?

Maybe .... but what state should be the example. Heaven help us if its California!

On the flip side ... if things tighten up too much ...people will do this:

Samarye wrote:What I mean is the rules for an Alabama Corp should be the same as any other state.A state is a good size for administration, not individual legislation. Why should a Delaware corp be any different than an Alabama corp?

Beyond the lax corporation laws in Delaware, there are state/local tax issues that prevent a national corporation rule from ever working correctly. The complexities with bringing in new companies to any location, including tax incentives and whatnot, would become even more difficult to wade through if all corporations were set up under a single federal format. As it stands now, each state can control (or not) the corporate make-up for businesses licensed in each state. Passing that up to the federal level takes away state control. Not to mention, our already over-spent government budget would increase that much further with a federal corporate oversight office to monitor the necessary reportings for each corporation (i.e., taxes, annual reports, etc.). SEC isn't set up for such monitoring, as they focus solely on those companies that are publicly traded and are a watchdog for Wall St. shenanigans.

Maybe its a good time to end the ridiculous give-aways by states to snare a business from some other state, or steal jobs from another state as opposed to creating new jobs. The business should move to the best run area, not the one that can give them the most free taxes or land. I thought the conservatives were against "free stuff". I guess its OK if it goes to a big corp.